Significant control registers for CBCA and BC companies

Canadian corporations must keep records of the people who control them. The rules depend on where the company is incorporated. A federal corporation under the Canada Business Corporations Act (CBCA) files the information with the government. A British Columbia company under the BC Business Corporations Act keeps it in its own records. Founders choosing where to incorporate, and founders already running a company, need to know which regime applies.

Filing ISC information under the CBCA

Since January 22, 2024, CBCA corporations must file information about individuals with significant control (ISC) with Corporations Canada. They must also keep a copy of their ISC register with their corporate records. Corporations Canada notes that very few CBCA corporations are excluded, and those that are must still file to confirm the exclusion.

When to file:

• Every year, with the annual return.
• Within 15 days of recording a change in the ISC register.
• At incorporation.
• Within 30 days of a certificate of amalgamation or continuance.

What CBCA companies disclose publicly

Corporations Canada makes some ISC information public: full legal name, the dates the person became and ceased to be an ISC, a description of their control, and an address for service. The residential address becomes public only if no address for service is given. Date of birth, citizenship and tax residency stay private. Law enforcement and FINTRAC can access all of it.

CBCA penalties

A corporation that does not file may be refused a Certificate of Compliance or administratively dissolved. It may also be found guilty of an offence and fined up to $100,000. A Certificate of Compliance is often requested in financings, so missing filings can delay a round.

The BC transparency register

Private BC companies must keep a transparency register of significant individuals. The province's guidance says to look for individuals who hold, directly or indirectly, 25% of shares or 25% of votes, or who have the right to elect, appoint or remove a majority of directors. Individuals who are related or acting together must have their interests added up.

The BC register is kept at the company's records office with the central securities register, articles and minutes. The province states there is no requirement to file it with government.

The province suggests starting with two internal records: the central securities register and the articles. Shareholder agreements can also create rights that matter. If a shareholder is another company, partnership or trust, the indirect control rules apply.

Startup cases to watch

• Founder holding companies. A founder who owns shares through a holding company is still a significant individual through indirect control.
• Vesting and new hires. Option exercises and new issuances can change who crosses a threshold.
• Financings. A lead investor's fund may require you to look through to the individuals who control it.

Founder takeaways

• Confirm your statute. Search the federal corporations database if you are unsure whether you are a CBCA company.
• Update the register at every cap table change. Make it part of your closing checklist.
• Use an address for service. CBCA founders can keep home addresses off the public record.
• Keep a minute book. Registers, articles and resolutions should live in one place your lawyer can access.

This article is general information, not legal or financial advice. Speak with a qualified Canadian lawyer or accountant about your situation.

General information. This article is general information, not legal, tax or financial advice. Confirm the details with a qualified professional before you act.

Sources

1. Individuals with significant control: File your information
   Corporations Canada, ISED
2. How to Create the Transparency Register
   Province of British Columbia · Nov 1, 2024